Latin America and the crisis (points for the balance of a decade)

The decade of the 1980s was catastrophic for the countries of Latin America because of profound transformations in the world economy, which started in the 1970s, the wilting of the state development programs that were imposed after World War II, and the collapse of socialism with the incipient transition to market economies. The crisis started because of the erosion of the world economic system as constituted under the Bretton Woods agreement; the drastic drop in the economic growth of market economies; the increased costs of living and the deterioration of the environment; the decrease in industrial capacity; and the emergence of transnationalization of production. In Latin America, the economic models that had been in place without solving underdevelopment became even more obsolete (import substitution, internal trade, and the role of the state). The crisis of socialism and the rapprochement of eastern European countries to western Europe also affected Latin America (e.g., Germany cancelled 30 mine exploration projects in Bolivia due to investments in East Germany). The structural readjustment policies of the International Monetary Fund and the World Bank resulted in currency devaluations, redistribution of government funds, elimination of various subsidies, reduction of public debt and social expenditures, reduction of public employment, and payment of external debt. The result was more inflation (in Bolivia, Brazil, Peru, and Argentina, inflation rates were 683.7%, 157.1%, 100.1%, and 326.2%, respectively, between 1980 and 1986), unemployment, and poverty in the lost decade of the 1980s. After 1982, state expenditures on roads, education, hospitals, and nutrition declined by 40% in Mexico. Even though most countries returned to democracy in the region, this was at the cost of the increased role of the military and the transnationals. The grand parties collapsed and in Venezuela, Mexico, and Colombia authoritarian tendencies survived into the 1970s degrading democracy. The states' socioeconomic regulatory role has to be redefined.     

Latin America: a new developmental welfare state model in the making?1

Latin America is emerging from a century of transformation – from a traditional agrarian to an urban industrial economy – where countries have taken diverse historical paths. Some have almost completed this transformation, others are taking early steps, and most are living through it. State‐led transition has followed two successive development strategies. From the 1920s to the 1980s, state developmentalism, for the most part, successfully assumed the twin challenges of economic and social progress. In the final decades of the century, Latin American states adopted the policies of the Washington consensus, which emphasized the importance of business in the framework of globalization, benefiting the affluent few. However, an unambiguous shift in direction has been taking place in Latin America since the 1997 economic crisis. This article suggests that a new developmental welfare state model is in the making. How will it evolve over the wider space of an increasingly integrated Latin America?     

Latin America's recovery from debt problems: An assessment of model-based projections

This paper examines economic assumptions used in assessing prospective economic adjustment of Latin America in response to its debt problems. The analysis compares forecasts obtained by combining parameter estimates from different researchers' trade models with the authors' macroeconomic models for Brazil. Chile, and Mexico. The influence of econometric procedure on simulation results is discussed. Then, by simulation analysis, the following issues are addressed: (1) likelihood of high domestic growth rates for Latin America in the late 1980s; (2) whether OECD growth or interest rates have a larger impact on developing-country economies; (3) effects of dollar depreciation and high interest rates on Latin America's debt problems.     

Can Latin America carry its international debt? A prospective analysis using the Wharton Latin American debt simulation model

The international debt of the LDCs has become a critical concern, perhaps currently the most critical one, from the perspective of debtor countries and creditors alike. Through the efforts of the IMF, the BIS, the central banks, and the large commercial banks, a crash may have averted for the time being, but the heavy burden of the debt remains, particularly in Latin America, where it is increasingly concentrated. Draconian remedial measures now threaten social and economic development throughout the continent.This article evaluates the perspective for Latin American debts and payments using a debt simulation model. Debt restructuring with the usual “IMF conditions” will impose serious economic shocks in Latin America. But even so, debt service ratios will remain high except under optimistic assumptions about growth in the industrial countries and about commodity prices. Only in case of a solid economic recovery in the United States, Europe and Japan can one be sanguine about Latin America's ability to work its way out from under the debt burden.     

Social Policy and Development in Latin America: The Long View

In the new development strategy currently shaping Latin America, alternative social policy models have emerged. This article argues that far from being rival alternatives, each of these models considers the wide differences among countries. The region is emerging from a century of transformation – from a traditional agrarian economy to an urban industrial one – in which countries have taken diverse historical paths. Some have almost completed this transformation, others are taking early steps, and the vast majority are living through it. State‐led transition has followed two successive development strategies. From the 1920s up to the 1980s, state developmentalism has mostly successfully assumed the twin challenges of economic and social progress. In the last two decades of the century, Latin American states adopted the policies of the Washington Consensus, which emphasized the importance of business in the framework of globalization and benefited the affluent few. However, an unambiguous shift in direction has been taking place in Latin America since the 1997 economic crisis. This article suggests that a new developmental welfare state model seems to be in the making. How will it evolve over the wider space of an increasingly integrated Latin America?     

Social welfare and social work: the meaning of poverty programs in Latin America

During the last decade, the concern about poverty has turned into a key issue in the government discourse, and participatory poverty programs have multiplied all over Latin America. Nevertheless, poverty and social unrest keep growing. The objective of this article is to explain this apparent paradox. First there is an analysis of the relationship between structural adjustment, the growth of poverty, and the reorientation of broad social policy away from social rights towards selective and targeted poor relief. In order to illustrate the content and operation of a typical Latin American poverty program, the Mexican National Solidarity Program is examined. The initial question posed is whether this program alleviates poverty and grants a social minimum for the poor in view of the magnitude of poverty, the quantity of resources and their allocation. Next the participatory approach of the program is analyzed in relation to the empowerment of poor groups and communities. Finally, there is a reflection on the place of social work in this program and how the role of the social worker has been transformed.     

Crowding Out or Welfare Promotion? How Foreign Aid Affects Social Expenditures in Latin American Welfare Systems

Foreign assistance constitutes a significant share of government revenue in many low‐ and middle‐income economies and is targeted at poverty reduction and the promotion of social and economic well‐being. This study therefore examines fiscal responses by Latin American welfare states to the inflow of such aid. As a form of external non‐tax revenue, aid can function as a substitution for public welfare expenditure, with a crowding out effect being the likely outcome. This article investigates whether overall aid and aid that is particularly targeted at the social sector substitutes public welfare provision and, if so, whether it also substitutes its function. A time‐series cross‐section analysis of 19 Latin American countries for the period 1980–2008 provides limited support for the assumption that foreign aid payments influence the welfare budget. It is only the health care sector in middle‐income countries which experiences a small decrease in expenditures. Social security and education expenditures are not affected.     

Debt threshold for fiscal sustainability assessment in emerging economies

This paper explores the debt threshold for fiscal sustainability assessment for 14 emerging economies during the period 1999–2016. The threshold point is identified as the level which, if exceeded, promptly raises sovereign risk to an unsustainable level. As such, we employ a panel threshold analysis to the determination of debt limit, which can serve as a distinctive feature from other studies on fiscal sustainability. Our results demonstrate that non-Latin American economies are considered to be sustainable in the short run, as their debts remain below the threshold bounds of 40–55% of GDP. However, the long-run sustainability risk may emerge from a continuous upward trend in debt paths, implying the need for rebuilding fiscal buffers. It is important to emphasize that fiscal sustainability is far more challenging for most Latin-American economies. This is indicated by their debt accumulation beyond the threshold level of roughly 35% of GDP which is relatively lower than that estimated for the other countries. Indeed, during times of high debt, emerging countries in Latin America also face higher default risk since their sovereign risk premium respond more strongly to debt rise. Their paths toward fiscal sustainability, hence, requires an immediate imposition of strict fiscal discipline to relieve the debt pressure.     

Financial liberalization, exchange rates and stock prices: Exogenous shocks in four Latin America countries

This paper provides an analysis of the long-run relationships and short-run dynamics between stock prices and exchange rates as well as the channels through which exogenous shocks influence these markets. We use monthly data for the period January 1980 to February 2009 for four Latin America, namely, Argentina, Brazil, Chile and Mexico. We conduct our analysis by means of cointegration analysis and multivariate Granger causality tests. The main finding of our analysis suggests that stock and foreign exchange markets in these economies are positively related and that the U.S. stock market acts as a channel for these links. Moreover, it is shown that these links are independent of foreign exchange restrictions. Finally, stability tests proposed by Hansen and Johansen (1993) are applied and it is shown that the dimension of the cointegration space is sample independent while the estimated coefficients exhibit instability in recursive estimations. Instability in these long-run relationships is evident during the Mexican currency crisis of 1994-1995, the Asian crisis of 1997 and the 2007-2009 credit and financial crisis.     

Mothers at the Service of the New Poverty Agenda: Progresa/Oportunidades, Mexico's Conditional Transfer Programme

This article considers some of the changes and continuities in social protection in Latin America through a focus on the ways in which motherhood is positioned as key to the success of the new anti‐poverty programmes that have followed structural reform. It examines a flagship cash transfer programme known as Progresa/Oportunidades (Opportunities) established in Mexico in 1997 and now being widely adopted in the region. Characterized by some commentators as a quintessentially neo‐liberal programme, it is argued that Oportunidades represents a novel combination of earlier maternalist social policy approaches with the conditional, co‐responsibility models associated with the recent approaches to social welfare and poverty relief endorsed by international policy actors. In the first section, the gendered assumptions that have governed Latin American social policy are described; the second outlines social policy provision in Latin America and identifies the key elements of the new approaches to poverty; and the third critically examines the broader implications of the Mexican programme's selective and gendered construction of social need premised, as it is, on re‐traditionalizing gendered roles and responsibilities.     

Democracy and poverty: The implementation of social reforms in the countries of central and eastern Europe

Why has the political and economic transformation in Russia and central and eastern Europe been accompanied by deteriorating living standards? Many of the reform programmes have contained social elements, but these have been neglected in the implementation process. Certain barriers to change – mental, cultural, political and economic – have made the implementation difficult. Russia and central and eastern Europe have to pass through a problematic dual transformation, from authoritarianism to democracy and from centrally planned economies to market economies. Experiences from Latin America show that such transitions are virtually impossible. The social results from the transformations in central and eastern Europe have been disappointing, which has been documented by scholars in this field. Nevertheless, if the political and economic transformation processes continue, the prospectes for the future are relatively bright. But there is also a negative scenario with authoritarianism and civil war as endpoints. A more cautious transition to a market economy might improve social welfare and living standards.     

从“收入维持”到“资产建设”：我国最低生活保障制度的完善

我国的最低生活保障制度实行多年以来,在缓解贫困、保持社会稳定等方面发挥了积极作用。但是以收入为基础的现金和财务补贴只能维持基本的生活而无法摆脱贫困,并且出现了诸多的问题。资产建设已经成为扶贫政策新的走向,通过资产视角分析最低生活保障制度的弊端,探讨在巩固收入补贴政策基础上,将资产建设嵌入最低生活保障制度是对该制度的完善。     

Rags or Riches? Estimating the Probabilities of Poverty and Affluence across the Adult American Life Span

Objective . Poverty and affluence represent events central to the American identity of failure and success. Yet in spite of their significance, we know little about the actual likelihood of experiencing these events across the adult life course. In this article we empirically estimate the extent to which Americans will experience poverty and/or affluence during their adulthood. Methods . A series of life tables are constructed based upon data from 25 waves of the Panel Study of Income Dynamics. Our measure of poverty is identical to that used by the U.S. Census Bureau in estimating the overall U.S. poverty rates. Affluence is defined as 10 times the poverty level. Results . Results indicate that between the ages of 25 and 75, 51.1 percent of Americans will experience at least one year below the poverty line, 51.0 percent will encounter a year of affluence, while only 20.1 percent of Americans will avoid either of these economic extremes. The effects of race and education in altering the likelihood of encountering poverty versus affluence are substantial. Conclusions . The opportunities for acute economic failure and success appear to be very real components of the American experience. Based upon this, we discuss an alternative typology to conceptualizing stratification in America.     

美国“重返亚太”战略的发展及其影响

本文从美国重返亚太入手,分析近年美国对亚太政策的调整、变化及其根源,在此基础上探讨美国重返亚太政策对地缘政治的影响。在当前的国际形势下,美国重返亚太反映了美国重视与亚洲各国的合作,而不仅仅是在亚太搞对抗。当然,加强与亚洲各国,尤其是与中国的合作才最符合美国的国家利益。美国在重返亚太的过程中,受到经济实力因金融危机而削弱的影响,露骨地使用军事硬实力、挑唆亚洲一些国家对华敌视情绪,不利于亚洲各国的发展,也对美国当前的经济恢复没有好处。     

Providing social security in a context of change: Experience and challenges in Latin America

Over the past two decades Latin America has experienced major demographic, economic and social changes. The trend towards accelerated ageing of the population in most countries, together with the financial restrictions faced by social protection systems, has brought sweeping changes in pension programmes. The new demographic and labour context presents challenges for these new programmes which, unless they make the necessary adaptations, will definitely be unable to attain their stated objective of providing universal coverage and eliminating poverty in old age. This article offers a general discussion of the processes that the region is undergoing, as well as the limitations and challenges imposed by existing welfare systems. Finally, it examines the options available to retain the objective of universal coverage and thus ensure the economic needs of the elderly population.     

Trends in the urbanization process in Central America in the 1980's

In the 1980s, urbanization in Central America was increasing compared to the three previous decades. By 1990, the urban population reached 42% in Guatemala, 44% in El Salvador, 43% in Honduras, 59% in Nicaragua, 53% in Costa Rica, and 54% in Panama. The urban population increased mostly in the largest cities, in contrast to Latin America, where secondary cities grew fastest. This trend was particularly true in Managua and San Salvador because of the military conflicts. The only exception was Honduras, where the second city underwent stronger growth. The urban population comprised 51.7% women and 48.3% men in Central America. The segregation and polarization of social classes was also increasing because of increased poverty and unemployment during the 1980s. This was partly caused by the increasing privatization of public services, decentralization, and the reinforcement of local governments, which all ensued from the structural readjustment programs of the International Monetary Fund. This neoliberal model of economic development in the short run resulted in increased poverty and unemployment for the urban populations. In 1982, the informal sector represented 29% of the total employment in Central America, and its share reached 40% in Managua and San Salvador. Urban unemployment increased from 2.2% in 1980 to 12% in 1988 in Guatemala; from 8.8% to 13.1% in Honduras; and from 10.4% to 20.8% in Panama. In the political arena, the process of democratization was underway, with civil presidents taking power and promoting privatization and deregulation of the economy. There was a close relationship between the urban social structure, the economy, and politics in the region. In Costa Rica, during the Arias administration between 1986 and 1990, a program was implemented creating 80,000 new homes, and in El Salvador there was an increasing demand to find a negotiated solution to the military conflict. These new political and economic perspectives could lead to genuine popular participation in solving urban problems.     

Changes of Electoral Politics under the Growing Wealth Gap in East Asia since the Global Financial Crisis: South Korea and China’s Taiwan in Comparison

Abstract

The economic recession caused by the global financial crisis of 2008 affected political change across the world in different ways. Economic and social problems turned into political crises in North Africa. In Europe and America, dissatisfaction over such problems caused social unrest but did not imperil the political order. In East Asia, where competitive party politics have just emerged, the financial crisis sparked a correlative political and economic reaction model involving economic recession—growing wealth gap—public policy transition in electoral politics. Major electoral campaigns over the past five years in China’s Taiwan, the Republic of Korea and other economies in East Asia indicate that prioritizing economic growth and equitable distribution are emerging to be common core issues in different parties’ electoral competition despite remnant historical questions and highly politicized issues. The new electoral politics based on public policy competition has gained greater space for development against the background of an economic recession and a growing wealth gap, and is exerting a profound influence on the political and economic development process in East Asia.     

Income Protection Through Direct Employment Programmes: Recent Concepts and Examples from Latin America

The risk of unemployment in Latin America is high. Unemployment insurance exists only in a few countries; coverage is small, and virtually non-existent in the informal economy. For this reason social protection policies for unemployed workers, defined in the broad sense, have addressed and strengthened the role of direct employment programmes and assistance through cash subsidies. This article describes the main features (financing and administration) of direct employment programmes in the region and their objectives, and evaluates their functioning in terms of targets and coverage, costs and impact. Available studies show that the net direct impact of such programmes on unemployment rates and on beneficiaries' incomes is in most cases relatively low. Nevertheless, in some cases they have helped to lower levels of unemployment and poverty, and have indirect positive effects that are more difficult to measure, such as incentives to economic recovery resulting from the chain effect on consumption of beneficiaries buying goods. For this reason direct employment programmes remain a fully valid mechanism, especially in social emergencies.     

金融危机的逻辑及其社会后果

目前中国的经济问题,从表面看来,是在美国金融危机冲击的背景下发生的,但从根本上来说,是一场从生活必需品时代向耐用消费品时代转型转不过去而形成的传统的生产过剩危机。原发于美国的金融危机只是引发并加速了正在酝酿中的中国的生产过剩危机。因此,美国的问题不一定是中国的问题。中国目前所面临的问题更具有传统的生产过剩危机的特点。这是我们分析中国在这次危机中一些重要问题的前提,而对经济危机产生的社会后果的讨论,也必须建立在这一前提的基础之上。中国所面临的问题主要是表现在实体经济的层面及其该问题向社会层面的传导。在这种情况下,我们面临的重要任务是,利用经济危机的机会,真正实现发展方式的转变,为从生活必需品时代顺利转型到耐用消费品时代创造条件;同时进行社会安全网络的建设,形成可以隔绝或减缓经济危机向社会层面传导的过滤机制。     

The G20 and the world economy: Performance and prospects

In the twenty-first century the balance of world economic growth has shifted from the G7 industrialized economies, led by Europe, Japan, and the United States, to the emerging economies of Asia, especially China and India. While world growth will continue at a rapid pace, members of the G7 will grow more slowly than the world economy, while China and India will grow more rapidly. Growth in the advanced economies will recover from the financial and economic crisis of the past decade, but a longer-term trend toward slower economic growth will be re-established.